Payments are an integral part of the customer experience in today's online world. With so many different standards across countries, it's a challenging feat. But those companies that still view payments as merely transaction enablers witness increased cart abandonment rates and lost conversion.

Most online businesses used to offer only a limited number of payment options, forcing their customers to settle with credit cards or PayPal. Many still do. But today's consumer expects payment options that deliver greater value, more flexibility, and more choice.

With contactless and alternative payment options booming during the pandemic, the travel industry has considerable room to integrate different payment options and deploy innovative instruments that enhance the overall customer retailing experience.

Bringing loyalty points into the equation  

Spearheaded by airlines, loyalty-enabled services are fast becoming a major revenue stream in travel. When global aviation "shut down" from 2020-2021, many airlines leveraged their loyalty operations and created new experiences for members. This ultimately allowed airlines to monetize a large chunk of loyalty points that remained unused in customer wallets. Loyalty point redemption was also a key customer engagement initiative for most airlines to nurture relationships with their loyal customers when flights were grounded. But what happens when loyalty points remain unused?

Regardless of the industry, unused loyalty points directly equate to low customer engagement. And sometimes even frustration. Providing customers with more points but less avenues to redeem them is an obstacle to building loyal relationships. When the pandemic struck, this became a major problem. Customers had millions of points in their wallets, but with limited travel options to redeem them. Indeed, the redemption experience and ease of redemption are just as important as the actual reward.

Customers deserve a better redemption experience  

The number of unclaimed loyalty points was estimated to be as high as US$100 billion, adding pressure on companies to relieve themselves of the obligation to repay the debt to consumers. When we talk about unused points, we also need to talk about the Breakage Rates, the percent of points issued that do not get redeemed. Many different reasons can play into high Breakage Rates, including disengaged loyalty program members due to the lack of simple redemption options. Hence, loyalty reward redemptions should be treated more seriously and considered as an investment in building customer lifetime value.

Every brand sees its loyalty points or digital currencies as valuable as regular currencies. So why can't customers leverage their loyalty points or digital currencies? It is all about supply and demand, and finding the right balance between "Earn" and "Burn" opportunities. In simple terms, offering a seamless points earning system while at the same time creating avenues for members to easily spend those points on valuable services. If this equation isn't balanced, unhappy customers may eventually break away from the brand.

Traditionally, "Burn" options have not been perceived as valuable enough by customers. To address this, airlines have expanded from the initial limited benefits of seat purchases, upgrades, and priority boarding to include diverse ancillary options such as paid programs and subscription programs. Increased product options may help lower Breakage Rates, but that's not enough – simplifying the redemption experience is critical to increasing conversion.

Payments are core to any shopping experience, and redemptions are no different. Travel comapnies can achieve quick wins in the payment experience by allowing:

• Payments using loyalty points
• Points swapping through loyalty wallets
• Payments using loyalty points at partner sites
• Payments using partner loyalty points

Enabling a flexible payment experience  

The travel industry has much room to reimagine the payment experiences it offers by focusing on the ease and flexibility of different payment options. Identifying customer personas, mapping customers' payment needs, and improving the redemption experience are significant in this transformation journey. Forcing provider payment options on customers is no way to increase loyalty or conversion. Offering a payment ecosystem that allows customers to choose from different payment options, including paying with points, strengthens brand engagement through an enhanced retailing experience. 

The challenge here often stems from the technology ecosystem that powers payment experiences. Integrating loyalty point redemption along with traditional digital payment options may not be supported by the existing payment infrastructure in the business. Developing a new system in-house can be lengthy and costly, and will require platform customizations to integrate new payment options as they arise. It all leads to spiralling costs, time, and complexity.  

So, what's the solution?  

Integrating a flexible payment layer that offers granular control over data, flexible business rules, and highly configurable payment options is the key to enabling modern retailing experiences that boost conversion. SaaS solutions do this exceptionally well, facilitating end-to-end integrations with payment instruments, loyalty programs, and partner ecosystems. Furthermore, SaaS platforms easily scale to business needs and their vendors take responsibility for ongoing product R&D that help the payment experience evolve in tune with market trends. All in all, a SaaS payments platform combined with a cutting-edge digital wallet relieves travel brands from having to constantly invest in and upgrade their payment infrastructure, representing a lower total cost of ownership than on-premises or in-house systems.  

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